In one of the most competitive M&A (Mergers & Acquisitions) battles in the history of the sector, KKR came out the winner in the deal reached for Coty Professional Beauty, including the Wella, Clairol and ghd brands.
KKR is an American global investment firm; its Private Equity platform invests in and partners with industry-leading franchises and companies poised for significant improvement or growth.
The strategic partnership involves the sale of a 60% majority stake in Coty’s Professional Beauty and Retail Hair Business, at a contemplated enterprise value of $4.3 billion. Coty will retain the remaining 40% interest in the business, which is number two in the salon hair care industry behind world leader L’Oréal.
KKR faced a formidable opponent in Henkel which, for the second time, was a top contender for this business; it lost out to Coty in 2015 when Procter & Gamble sold the business.
If a deal had been reached by the end of 2019, the outcome likely would have been different. With COVID-19 raging across the globe in earnest in early 2020, global research company Kline estimates that salon hair service revenues dropped by over $5 billion in Q1 alone (based on Kline’s Impact of COVID-19 on the Salon Hair Care Market). This has had a direct and immediate impact on Henkel, Coty, and many others, with industry revenues headed for a steep decline in 2020 and a long road ahead for recovery. However, with this bleak outlook, the dynamics of the Coty Professional Beauty deal shifted, giving the upper hand to KKR, with Henkel’s position as a strategic buyer weakened due to the challenging current and future state of the salon industry.